Income Tax (Trading and Other Income) Act 2005 section 321

Mutual business

Section 321 confirms that the concept of mutuality does not apply to property businesses, ensuring all receipts and expenses are included in the profit calculation.

• The rules relating to mutual business do not apply to property businesses under Part 3 of the Act
• All receipts and expenses must be brought into account when calculating property business profits, even where a relationship of mutuality exists between parties
• Mutuality is a longstanding legal concept based on the principle that a person cannot make a profit out of themselves, typically arising where contributors to a common fund share in its surpluses
• This section takes a simpler approach than its predecessor by preventing the concept of mutuality from operating on property income amounts from the outset, rather than calculating mutual business profits separately and adding them to the property business total